Newsletter Issue No. 50 | November – December 2018

Economic situation at the end of the year

Economic growth will amount to a good 4% in 2018. A slight slowdown is expected for 2019; GDP is forecasted to grow by 3.8%. Growth is driven by con-sumption and investment. On the supply side, manufacturing, construction and retail trade are contributing to growth; agriculture stagnates.

Inflation will fall to around 3.6% in 2018 due to external factors. Thus, prices are largely stable. The Moldovan Leu remains strong; this leads to growth of imports, which will rise by around 21% in 2018. Exports are also rising at a double-digit rate of around 16%. Trade integration with the EU continues; about 69% of exports are going to the EU market. The fiscal deficit in 2018 is expected to be only 1.9% of GDP despite the upcoming parliamentary elections. For 2019 a deficit of 2.8% of GDP is expected, thus, it will remain manageable.

Overall, economic growth will remain at roughly the same level as in previous years. Reforms are needed for a higher growth – especially in the judiciary and the education system. The banking sector and the tax administration show how such reforms can work. The international community should provide the neces-sary support after the parliamentary elections on 24 February in order for that to be achieved. At the same time, clear conditions must be a prerequisite for this support.

Download Newsletter 50/2018